Mexico's energy regulation commission (CRE) will at the end of the month launch the first phase of a process to migrate 70pc of natural gas supply contracts currently held by state-owned oil and gas company Pemex to private companies.

The contract migration will be carried out in three phases beginning the week of 31 January. The first and second phases will migrate 20pc each of the current volume of gas contracts held by Pemex Transformacion Industrial and the third phase will migrate 30pc of contracts, says the CRE.

Contracts subject to migration will be randomly selected and will include both large contracts of more than 40,000 GJ/d as well as bundles of smaller contracts of less than 40 GJ/d.

Pemex will publish an offer for each contract that is randomly selected and customers may accept Pemex' offer, migrate to an authorized private gas supplier or make a bid to reserve capacity in the upcoming open season.

Similarly, authorized gas suppliers will be allowed to freely seek out customers offering the same minimum conditions as Pemex, or to reserve capacity in the open season.

Similar gas release programs that employ a gradual contract migration strategy by the dominant company have been successful in countries such as the UK, Germany and France, says the CRE.

The open season, to be concluded in April, will allocate 33.9pc of total pipeline capacity to new private-sector gas suppliers. State-run oil company Pemex and state-run power utility CFE were allocated 40pc of the system's 6.2 Bcf of capacity, while existing independent power producers were assigned 1.55 Bcf, leaving 2.10 Bcf or 33.9pc of total capacity up for grabs under the open season.

Participants have until 10 February to submit an initial price bid, the results of which will be made public at close of business that same day. Participants may submit a counter bid within ten days.

Winning bidders will secure capacity in the system for one year, starting on 1 July, 2017.

Source: Argus Media - http://www.argusmedia.com/news/article/?id=1390398